WASHINGTON, D.C. – In the wake of the Federal
Reserve’s extraordinary actions last year to stabilize the financial system,
U.S. Senators Jeff Merkley (D-OR) and Bob Corker (R-TN), members of the Senate
Banking Committee, today introduced legislation that will require the
Government Accountability Office (GAO) to conduct an audit of the Fed’s
emergency lending programs. The Federal Reserve Accountability Act will
monitor and protect taxpayer dollars without intruding upon the Federal
Reserve’s independent monetary policy or its role as lender of last
resort.

“Transparency and accountability are fundamental principles
of representative government,” Merkley said. “During this financial
crisis, Federal Reserve credit contributed greatly to the stabilization of the
system. In doing so, the Federal Reserve departed significantly from its
traditional relationship with markets and took on unprecedented new
risks. Such a significant change in the Federal Reserve’s traditional
activities demands responsible, robust oversight. The Federal Reserve
Accountability Act strikes the right balance between protecting taxpayer
dollars and respecting the central bank’s responsibility to manage monetary
policy.”

“The Federal Reserve has provided our financial system with
emergency credit during this time of financial hardship, and in the course of
doing so, has seen a $1.4 trillion increase in its balance sheet. Despite
its independence, these are still taxpayer dollars at risk, and many Americans
have called for an audit of the Fed,” Corker said. “This bill is the way
to do it. We give the Government Accountability Office the authority to audit
the Fed's emergency credit facilities without inappropriately compromising the
independence of the Fed or politicizing its role in crafting monetary policy.”

The Federal Reserve Accountability Act would require the GAO
to audit all remaining emergency lending programs not already subject to
audit. To protect against the risk that disclosure of the participation
of particular institutions could disrupt markets, the GAO would be required to
redact the names of the specific institutions. Names would, however, be
made available one year after each emergency program is no longer used.
In addition, to encourage greater accessibility for the average taxpayer, the
Fed would be required to place these GAO audits along with additional audit
materials on its website under a new “Audit” section.